When a Belocal franchisee sells a print advertisement for inclusion in their own Publication, what factors are subtracted from or added to the total cash received to determine the final amount?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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"Commission" the Franchisee will receive for each of the N2 publications it manages, including the Publication, is calculated as follows:
- (i) For any print advertisement Franchisee sells for inclusion in the Publication, the amount equal to the total Cash Received for the Publication in the applicable month; minus the Royalty for the Publication for the applicable month; minus the Publication Expense for the Publication for the applicable month; plus
- (ii) For any print advertisement Franchisee sells for inclusion in a publication managed by another franchisee or the Franchisor's affiliate, as applicable, (x) the amount equal to Franchisor's then-current Outgoing Cross-Selling Fee, divided by the total number of publications Franchisee manages, or (y) the Pre-print Commission, divided by the total number of publications Franchisee manages; plus
- (iii) For any print advertisement another franchisee or Franchisor's affiliate sells for inclusion in the Publication, the amount equal to Franchisor's then-current Receiving Cross-Selling Fee; plus
- (iv) The amounts paid by advertisers for the digital extended reach ("Extended Reach") services allocated to the Publication; minus the Extended Reach fee for the applicable month;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the commission a franchisee receives for print advertisements they sell for inclusion in their own publication is calculated by taking the total cash received for the publication in the applicable month, then subtracting the royalty for the publication and the publication expense for that month. Additionally, amounts paid by advertisers for digital extended reach services allocated to the publication are added, less the extended reach fee for the applicable month. If Belocal institutes a fee for managing a client in the future, the franchisee will receive a commission equal to Belocal's then-current Managing Cross-Selling Fee, divided by the number of publications the franchisee manages. Finally, all other applicable fees and/or deductions are subtracted, including extra copy orders and late commission deductions.
This means that a Belocal franchisee's earnings from their publication are directly affected by several factors beyond just the initial advertising revenue. The royalty (15% of advertising value) and publication expenses are significant deductions. The publication expense is determined by Belocal's affiliate based on the number of homes in the mailing list and the number of pages in the publication, with the cost basis potentially increasing annually, but not by more than the greater of 10% or the percentage change in the Consumer Price Index, unless postage rates increase.
The addition of extended reach service payments, minus the associated fees, provides an opportunity for franchisees to increase their revenue through digital services. However, the potential for additional fees and deductions, such as those for extra copies or late commissions, highlights the importance of careful financial management. The commission structure also incentivizes franchisees to manage clients effectively, as future managing cross-selling fees could provide additional income, although this is contingent on Belocal instituting such a fee.
Overall, the commission calculation for Belocal franchisees is complex, involving multiple variables that can impact their profitability. Franchisees need to understand these factors and manage their operations efficiently to maximize their earnings. The potential for 'Negative Commissions,' where expenses exceed cash received, further underscores the need for careful financial planning and sales efforts.